The Keyhole makes observations about consumers, brands, ads, & marketing, through a predictive customer loyalty lens. Most marketing is ineffective to today's bionic consumer, given undifferentiated products, loss of "brandness," & hard to come by profits. Marketers talk about "engagement" but nobody seems to be doing a very good job measuring or integrating it into what they do & it shows! The Keyhole opens a dialogue on this subject & suggests real-world solutions with the marketing community.

Monday, August 31, 2015

Remember when you were growing up and they told you to
“start your day with a good breakfast?” And then the joke when you were in
college, “Beer – it’s not just for breakfast?” Well, here’s what happens when categories
weaken and worlds collide!

Wheaties (the “breakfast of champions”) is partnering with a
craft brewery to create a limited-edition beer called “HefeWheaties.” That name
is a takeoff on a German style of beer called “hefeweizen,” a malt beverage made
from – you guessed it – wheat.

It had to happen. All breakfast food cereals have been
suffering over the past few years and brands have been losing their snap,
crackle, and pop. General Mills hasn’t been immune to shifts in consumer eating
habits (moving away from cereal bowls to foods like granola bars and yogurt)
and expectations (moves from sit-down to grab-and-go options).

General Mills reported their fiscal 4th quarter numbers in
July indicating that their net income of $186.8 million was down from $404.6
million in the year-earlier period. They, and every other cereal brand, are
looking for ways to engage customers and increase sales, so why not license the
name and logo to a different category – in this case, craft beers – that is
growing? Right now the 16-ounce tallboy cans will only be available in the
Minneapolis-St. Paul market, appearing at the end of August and, as you might
have already guessed, don’t really contain any Wheaties.

Is that important? Well, what years of research and in-market
validations have proven, companies can have the financial and production
wherewithal to do something like this, but can’t be sure that it will take in
the marketplace. A good leading-indicator of that is brand engagement. Not
awareness of the brand, but consumers’ engagement with the brand; that is, the
degree to which the brand is seen to meet expectations that consumers hold for
the category in which the brand competes. In the category of Breakfast Cereal
brands, the drivers are: “Tasty Lifestyle,” “Price-Value,” “Nutrition,” and
“Healthy Options,” all of which one could judiciously apply to craft beers.
They are the same ingredients in many instances. Anyway, brands that have high
engagement can help fuel such line-extension efforts, up to six times greater
than brands with low engagement.

According to our most current Customer Loyalty Engagement
Index, Adult Breakfast Cereal engagement rankings for the top-10 brands are as
follows:

Cheerios

Special K

Wheaties

Honey Nut Cheerios

Frosted Mini Wheats

Honey Bunches of Oats

Fiber One

Kellogg’s Corn Flakes

Rice Krispies

Kellogg’s Raisin Bran

Based on primary ingredients and their consumer engagement
levels, Cheerios (oat bran) could team with a distillery to offer a craft
vodka, another growing category. And, if that engages consumers, does that mean
we can look forward to a Special K gin, Honey Bunches of Oats mead, or Rice
Krispies rice wine?

With Wheaties at #3, they just might have a better chance
than some other breakfast cereal brands that might be considering entering a
crafted, alcoholic beverage category. Ryan Petz, the Fulton Brewery’s president
acknowledged that this is only a test-market. “If it’s something everybody
loves, we’ll obviously consider doing it in a bigger and more widely distributed
way in the future.” Obviously.

In closing, it’s worth reminding you to start
off each day with a good breakfast. In this particular instance it may be the
only six-pack some consumers will ever be able to manage for themselves!Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 23, 2015

If you haven’t heard, McDonald’s hasn’t been doing all that
well. They haven’t been doing all that well for some time now, and the company
is going to close more U.S. restaurants this year than they open, something that
hasn’t happened in 45 years!

McDonald’s announced they’re closing 700 stores worldwide
and starting in September they’re eliminating 135 jobs at corporate
headquarters in Oak Brook, IL and 90 other management roles in Asia and Europe.
The store closings and job eliminations are part of CEO Steve Easterbrook’s
reorganizing efforts which, according to McDonald’s spokespersons, is designed
to “implement meaningful changes to reset (the) business.” Well, job cuts and
store closings might help the bottom line, but it won’t “reset the business.”

To do that you need to do something to help the brand!
Demographics and associated core values of generational cohorts are why
McDonald’s is dong so badly. Consumers just aren’t as loyal or engaged with the
McDonald’s brand anymore. And as loyalty is a leading-indicator of
profitability, it isn’t surprising that same store sales and associated
profitability is down too.

Baby Boomers want better service, believe they deserve it,
and are willing to pay for it! Gen Xers are looking for value-for-dollar but
they want stuff fast too, and McDonald’s cluttered, be-all-you-can-be menu has
stymied that effort. Kiosks where consumers can move from super-sizing to
customizing aren’t likely to help. Yes, yes, Millennials like customized food,
but they think about brands like McDonald’s as “dollar food,” the result of
McDonald’s long- habituated reliance on the “Dollar Menu.” Deals still abound,
and McDonald’s is going to test offering breakfast throughout the day in an
effort to boost sales.

Last month Mr. Easterbrook noted, “We have made meaningful
progress since announcing the initial steps of McDonald’s turnaround plan in
early May, and while our 2Q results were disappointing, we are seeing early
signs of momentum.” Although it was reported that McDonald’s same-store sales
were -2% in 2Q’15 and that operating income fell 6%, so perhaps
Mr. Easterbrook has a different definition of ‘momentum.’ Anyway, he said that
he was “confident that we will create the transformation necessary for
McDonald’s to become a modern, progressive burger company delivering a
contemporary restaurant experience.”

We think that it’s worth pointing out to Mr. Easterbrook
that Panera’s same-store sales were up nearly 5%, which is perhaps a better
example of momentum. And there’s a big difference between saying it, doing it,
and having consumers believe you and behave positively towards you.

The McDonald’s brand may be all over, and maybe not as all
over as in years past, but you can’t be all things to all consumers. You really
do have to stand for something in the mind of the consumer. If you don’t, loyalty
for your brand is only going to move in one direction.

Down.

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 16, 2015

When it comes to emotional brand engagement, one thing for
sure is consumers ultimately vote with their wallets. That’s a market truism
Whole Foods discovered after being the target of a New York Department of Consumer
Affairs investigation last month. The bottom line of that inquiry? Nine Whole
Food stores routinely overcharged on pre-packaged products.

Whole Foods’ bottom line? The company reported disappointing
quarterly results and cut its sales forecast. Total sales increased 8% but its
stock took a nosedive, losing nearly 11%, dropping to $36.39 in after-market
trading after posting those results. That noted, in this year’s January
Customer Loyalty Engagement Index, natural food stores ranked as follows:

Whole Foods

The Fresh Market

Trader Joe’s

Sprouts Farmers Market

“Trust” turns out to be the second-most important driver for
the category. That’s preceded by “Wide Range of Healthy Sustainable, Organic
Foods,” and is followed by “A 1st Class Shopping Experience” and “Real Value
and Added-Value,” with consumers’ highest expectations for – you guessed it –
“Trust.”

The first rule of brand engagement is “don’t disappoint the
consumers when it comes to their expectations,” because if you do, it usually
shows up on the bottom line, or in this case the check out line. Whole Food
same-store sales were + 1.3%, less than half of what Wall Street was expecting.

Walter Robb, co-CEO of Whole Foods, said during an earnings
call, “By any measure the audit had a significant impact on our sales. Trust
was broken and has to be rebuilt.” Smart. Brands with high engagement are six
times more likely to be given the benefit of the doubt by consumers in
uncertain circumstances – just like the one here. So it might have just come
down to showing some contrition and taking care of the problem.

But co-founder and co-CEO John Mackey apparently saw it
differently. He said, “We don’t think our track record is any different from
any other supermarket. These were inadvertent errors. It went viral in the
media and we feel we were victims.”

Which kind of breaks another couple of rules of brand
engagement: “Never disdain differentiation and/or compare your brand to
everyone else,” and “Try real hard not to blame your customers for your
mistakes!”

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 09, 2015

That it’s hard to emotionally engage Millennials isn’t a
surprise. What does surprise is the way marketers believe that more social
networking and entertaining advertising will. But, in the absence of real ROI
metrics, counting “shares” and tweets, and views has become the default
evaluation for assessments of efficiency for marketers.

Why? Primarily because counting is easy. Marketers do that
because they mistakenly equate things like sharing and tweets – usually a direct
consequence of entertaining consumers – with actually creating some sort of
relationship with Millennials, which are clearly not the same thing.

And measuring engagement isn’t as easy as it was before
consumers were born hot-wired to the Internet, but still It’s all about the expectations
that 21st century consumers hold for the category in which your particular
brands competes, and how well your brand meets those expectations. The most
important expectations are usually emotional. And, as most research really doesn’t
do a very good job of measuring emotions, counting stuff has become the method
of choice.

According to Brand Keys most recent 2015 analysis, the
top-20 brands, which best meet Millennial consumers’ expectations and,
therefore, to which Millennials are most engaged and loyal, include the
following:

Apple

Nike

Chipotle

Target

Amazon

Samsung

Sephora

Levi’s

PayPal

Old Navy

Under Armour

Beats

Google

Asus

Chevrolet

Converse

Verizon

Victoria’s Secret

Ford

Ralph Lauren

Brands that stand for the right emotional values maintain
relevance and actually create relationships, and the one’s that can better meet
higher Millennial expectations show higher degrees of loyalty than any other
generational cohort. The fact that most brands exist to be a business and not a
hobby notwithstanding, marketers really want to count as many Millennial
consumers as customers for some really basic reasons.

First, they’re rapidly becoming the largest age cohort in
the marketplace. Secondarily, estimates are that they represent $180 billion in
spending power today, so it’s important for marketers to think about how to
actually engage them and less time worrying about entertaining them.

One thing that crosses all generational cohorts as regards
brand engagement and loyalty is that brands best able to meet consumers’
expectations for emotional values that drive the category will always show up
on the top of consumers’ shopping lists. A review of the brand loyalty leaders
in the 63 categories included in this analysis revealed that 91% were the
category’s leader. QED!

If you’re still into counting, stick with tweets, but you
shouldn’t count on that $180 billion dollars just yet. If you started counting
right now, it would take you 5,703 years, 303 days, 5 hours, 46 minutes, and 11
seconds to count that much money. Professionally, we prefer emotional
engagement metrics because they correlate highly with consumer behavior and
brand profitability. They’re available right now, and they’re a metric you can
count on anytime!

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 02, 2015

The Brand Keys 2015 Back-to-School spending report card is in and
households with school-age children (pre-school through 12th grade) do
not plan to spend more this year on back-to-school supplies than they
did last year, indicating an anticipated average spend of $650.00
(versus 2014’s $652).According to 8,500 households the average
anticipated spending in all major back-to-school categories reflect
similar spending levels as last year.Clothing: $270.00Shoes (athletic & dress) $120.00Supplies $ 80.00Computers/Electronics/ Tablets/Smartphones: $160.00Books/Study Aids $ 22.00‘Preferred’
retail categories (versus last year’s) indicates an anticipated use of
all retail platforms with the biggest increases of where and how to buy
in Specialty Apparel Retailers and Department Stores. Catalogs were down
again in mentions, although, to be fair some consumer purchases have
just shifted from print catalogs to their digital counterparts. Online
has, of course, been growing generally, but increased use of mobile
outreach and advertising is likely responsible for this year’s growth
for that platform specifically.Discount Stores: 99% ( --- )Online 95% (+ 2%)Specialty Retailers 55% (+21%)Department Stores: 55% (+20%)Office Supply: 35% (+ 5%)Catalogs 20% (- 10%)Top 10 Retailers and E-tailers
This
year, the top 10 list of most popular retail brands added Walgreen’s
and Sears, with Target moving to the #1 spot just ahead of Walmart. It
would appear that their return to a ‘cheap chic’ positioning is working
well for them. For e-tail brands, Target.com moved up the list from
2014’s #10 spot to #3. Nike.com moved up, Overstock.com moved down, and
eBay did not appear in this year’s top-10, with the following rankings:

Retail

Target

Walmart

Macy’s

CVS/Walgreen’s

Best Buy

TJ Maxx

Staples

Footlocker

Sears

Apple stores

E-tail

Amazon.com

Walmart.com

Target.com

Kohls.com

Macys.com

Zappos.com

Nike.com

Gap.com

Bestbuy.com

Overstock.com

While
consumer confidence indices have been moving in a positive direction
this year, it appears that parents are taking a hard look at what their
children really need for back-to-school. There’s always a need to
re-stock in some areas because there’s no way to get around children’s
growth spurts, which accounts for the 21% increase for Specialty Apparel
Retailers and Department Stores sales.Nearly half the
respondents indicated they had already bought and stockpiled necessities
and supplies for the first day of school before August. That’s up 15%
over last year. Another 30% indicated they would wait for the ‘Summer
Sales.’ Retailers have spent more than a decade teaching consumers they
can get things cheaper or for better value if they wait a little longer
or look a little harder, and consumers have been fast learners, so the
remaining 20% are apparently waiting until the last minute.In
addition to the low-lower-lowest pricing marketplace, bigger ticket
items, like tablets smartphones and computers, which in years past had
traditionally been purchased at the start of the school year, are now
purchased throughout the year, so parents aren’t upgrading a mobile
device just because classes are starting.Value, of course, isn’t
just about pricing (or shouldn’t be), it’s about brand, brand
differentiation, and brand engagement. Retail brands that can
emotionally engage consumers are seen as surrogates for added-value, and
those will be the brands that benefit most.Consumers not only
believe that, they behave that way in the marketplace, a fundamental
lesson all back-to-school retailers need to learn.

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

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The Keyhole: Peeking at 21st Century Brands

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About Us

Robert Passikoff, founder and president of Brand Keys, is a sought-after speaker and global thought leader on engagement and loyalty. He has pioneered work in these areas, creating the Customer Loyalty Engagement Index and the Sports Fan Loyalty Index. New York University’s communication school has declared Dr. Passikoff “the most-quoted brand consultant in the United States.”